KAIZEN, The Concept \\
FIGURE 1.7 Deming Wheel
seminar on quality-control management. This was the first time
QC was dealt with from the overall management perspective.
In 1956, Japan Shortwave Radio included a course on quality con-
trol as part of its educational programming. In November 1960, the
first national quality month was inaugurated. It was also in 1960
that Q-marks and Q-flags were formally adopted. Then in April
1962 the magazine Quality Control for the Foreman was launched
QCby JUSE, and the first circle was started that same year.
A QC circle is defined as a small group that voluntarily per-
forms quality-control activities within the shop. The small group
carries out its work continuously as part of a company-wide pro-
gram of quality control, self-development, mutual education, and
flow-control and improvement within the workshop. The QC circle
is only part of a company-wide program; it is never the whole of
TQC or CWQC.
Those who have followed QC circles in Japan know that they
often focus on such areas as cost, safety, and productivity, and that
their activities sometimes relate only indirectly to product-quality
improvement. For the most part, these activities are aimed at mak-
ing improvements in the workshop.
QCThere is no doubt that circles have played an important part
in improving product quality and productivity in Japan. However,
their role has often been blown out of proportion by overseas
QCobservers who believe that circles are the mainstay of TQC
activities in Japan. Nothing could be further from the truth, espe-
cially when it comes to Japanese management. Efforts related to
12 KA1ZEN
QC circles generally account for only 10 percent to 30 percent of
the overall TQC effort in Japanese companies.
What is less visible behind these developments is the transfor-
mation of the term quality control, or QC, in Japan. As is the case
in many Western companies, quality control initially meant quality
control applied to the manufacturing process, particularly the inspec-
tions for rejecting defective incoming material or defective outgoing
products at the end of the production line. But very soon the reali-
zation set in that inspection alone does nothing to improve the
quality of the product, and that product quality should be built at
the production stage. "Build quality into the process" was (and still
is) a popular phrase in Japanese quality control. It is at this stage
that control charts and the other tools for statistical quality control
were introduced after Deming's lectures.
Juran's lectures in 1954 opened up another aspect of quality con-
trol: the managerial approach to quality control. This was the first
QCtime the term was positioned as a vital management tool in
Japan. From then on, the term QC has been used to mean both
quality control and the tools for overall improvement in managerial
performance.
QCInitially, was applied in heavy industries such as the steel
industry. Since these industries required instrumentation control,
SQCthe application of tools was vital for maintaining quality. As
QC spread to the machinery and automobile industries, where con-
trolling the process was essential in building quality into the prod-
uct, the need for SQC became even greater.
QCAt a later stage, other industries started to introduce for such
products as consumer durables and home appliances. In these
industries, the interest was in building quality in at the design stage
to meet changing and increasingly stringent customer requirements.
Today, management has gone beyond the design stage and has begun
to stress the importance of quality product development, which
means taking customer-related information and market research
into account from the very start.
QCAll this while, has grown into a full-fledged management
tool for KAIZEN involving everyone in the company. Such company-
TQCwide activities are often referred to as (Total Quality Control)
or CWQC (Company-Wide Quality Control). No matter which name
is used, TQC and CWQC mean company-wide KAIZEN activities
KAIZEN, The Concept 13
involving everyone in the company, managers and workers alike.
Over the years, QC has been elevated to SQC and then to TQC or
CWQC, improving managerial performance at every level. Thus it
is that such words as QC and TQC have come to be almost synony-
mous with KAIZEN. This is also why I constantly refer to QC,
TQC, and CWQC in explaining KAIZEN.
On the other hand, the function of quality control in its origi-
nal sense remains valid. Quality assurance remains a vital part of
management, and most companies have a QA (Quality Assurance)
CWQCdepartment for this. To confuse matters, TQC or activities
are sometimes administered by the QA department and sometimes
TQCby a separate office. Thus it is important that these QC-related
words be understood in the context in which they appear.
KAIZEN and TQC
Considering the TQC movement in Japan as part of the KAIZEN
movement gives us a clearer perspective on the Japanese approach.
TQCFirst of all, it should be pointed out that activities in Japan
are not concerned solely with quality control. People have been
fooled by the term "quality control" and have often construed it
within the narrow discipline of product-quality control. In the
QCWest, the term is mostly associated with inspection of finished
QCproducts, and when is brought up in discussion, top managers,
who generally assume they have very little to do with quality con-
trol, lose interest immediately.
It is unfortunate that in the West TQC has been dealt with mainly
in technical journals when it is more properly the focus of man-
agement journals. Japan has developed an elaborate system of
KAIZEN strategies as management tools within the TQC movement.
These rank among this century's most outstanding management
QCachievements. Yet because of the limited way in which is under-
QCstood in the West, most Western students of Japanese activities
have failed to grasp their real significance and challenge. At the
same time, new TQC methods and tools are constantly being stud-
ied and tested.
TQC undergoes perpetual change and improvement, and it is
never quite the same from one day to the next. For instance, the
so-called Seven Statistical Tools have been indispensable and have
14 KAIZEN
QCbeen widely used by circles, engineers, and management. Re-
cently, the original seven have been supplemented by a "New Seven"
used to solve more sophisticated problems such as new-product
development, facility improvement, quality improvement, and cost
reduction. New applications are being developed almost daily. (See
Appendix E for the Seven Statistical Tools and the New Seven.)
TQC in Japan is a movement centered on the improvement of man-
agerial performance at all levels. As such, it has typically dealt with:
1. Quality assurance
2. Cost reduction
3. Meeting production quotas
4. Meeting delivery schedules
5. Safety
6. New-product development
7. Productivity improvement
8. Supplier management
More recently, TQC has come to include marketing, sales, and
service as well. Furthermore, TQC has dealt with such crucial man-
agement concerns as organizational development, cross-functional
management, policy deployment, and quality deployment. In other
words, management has been using TQC as a tool for improving
overall performance. There will be detailed explanations of these
concepts later in the book.
QCThose who have closely followed circles in Japan know that
their activities are often focused on such areas as cost, safety, and
productivity, and that their activities may only indirectly relate to
product-quality improvement. For the most part, these activities
are aimed at making improvements in the workplace.
Management efforts for TQC have been directed mostly at such
areas as education, systems development, policy deployment, cross-
functional management, and, more recently, quality deployment.
The implications of TQC for KAIZEN will be dealt with in detail
in Chapter 3.
KAIZEN and the Suggestion System
Japanese management makes a concerted effort to involve employees
in KAIZEN through suggestions. Thus, the suggestion system is an
KA1ZEN, The Concept 15
integral part of the established management system, and the num-
ber of workers' suggestions is regarded as an important criterion in
reviewing the performance of these workers' supervisor. The man-
ager of the supervisors is in turn expected to assist them so that
they can help workers generate more suggestions.
Most Japanese companies active in KAIZEN programs have a
quality-control system and a suggestion system working in concert.
QCThe role of circles may be better understood if we regard
them collectively as a group-oriented suggestion system for mak-
ing improvements.
One of the outstanding features of Japanese management is that
it generates a great number of suggestions from workers and that
management works hard to consider these suggestions, often incor-
porating them into the overall KAIZEN strategy. It is not uncom-
mon for top management of a leading Japanese company to spend a
QCwhole day listening to presentations of activities by circles, and
giving awards based on predetermined criteria. Management is
willing to give recognition to employees' efforts for improvements
and makes its concern visible wherever possible. Often, the num-
ber of suggestions is posted individually on the wall of the work-
place in order to encourage competition among workers and among
groups.
Another important aspect of the suggestion system is that each
suggestion, once implemented, leads to a revised standard. For
instance, when a special foolproof device has been installed on a
machine at a worker's suggestion, this may require the worker to
work differently and, at times, more attentively.
However, inasmuch as the new standard has been set up by the
worker's own volition, he takes pride in the new standard and is
willing to follow it. If, on the contrary, he is told to follow a stand-
ard imposed by management, he may not be as willing to follow it.
Thus, through suggestions, employees can participate in KAIZEN
in the workplace and play a vital role in upgrading standards. In a
recent interview, Toyota Motor chairman Eiji Toyoda said, "One of
the features of the Japanese workers is that they use their brains as
well as their hands. Our workers provide 1.5 million suggestions a
year, and 95 percent of them are put to practical use. There is an
almost tangible concern for improvement in the air at Toyota."
Chapter 4 explains the suggestion system as practiced at Japa-
nese companies.
16 KAIZEN
KAIZEN and Competition
Western managers who have had some business experience in
Japan invariably remark on the intense competition among Japanese
companies. This intense domestic competition is thought to have
been the driving force for Japanese companies in the overseas mar-
kets as well. Japanese companies compete for larger market shares
through the introduction of new and more competitive products
and by using and improving the latest technologies.
Normally, the driving forces for competition are price, quality,
and service. In Japan, however, it is safe to say that the ultimate
cause of competition has often been competition itself. Japanese
companies are now even competing in introducing better and faster
KAIZEN programs!
Where profit is the most important criterion for business suc-
cess, it is conceivable that a company could remain unchanged for
more than a quarter of a century. Where companies are vying with
each other on the strength of KAIZEN, however, improvement must
be an ongoing process. KAIZEN ensures that there will be contin-
uous improvement for improvement's sake. Once the KAIZEN
movement has been started, there is no way to reverse the trend.
Process-Oriented Management vs.
Result-Oriented Management
KAIZEN generates process-oriented thinking, since processes must
be improved before we get improved results. Further, KAIZEN is
people-oriented and is directed at people's efforts. This contrasts
sharply with the result-oriented thinking of most Western managers.
According to Mayumi Otsubo, manager for tournaments and
special-event promotion at Bridgestone Tire Co. , Japan is a process-
oriented society while the United States is a result-oriented society.
For instance, in reviewing the performance of employees, Japanese
management tends to emphasize attitudinal factors. When the sales
manager evaluates a salesperson's performance, that evaluation
must include such process-oriented criteria as the amount of the
salesperson's time spent calling on new customers, time spent on
outside customer calls versus time devoted to clerical work at the
office, and the percentage of new inquiries successfully closed.
KA1ZEN, The Concept 17
By paying attention to these indices, the sales manager hopes to
encourage the salesperson to produce improved results sooner or
later. In other words, the process is considered just as important as
the obviously intended result— sales!
Japan's national sport is sumo. At each sumo tournament, there are
three awards besides the tournament championship: an outstanding-
performance award, a skill award, and a fighting-spirit award. The
fighting-spirit award is given to the wrestler who has fought excep-
tionally hard throughout the 15-day tournament, even if his won/lost
record leaves something to be desired. None of these three awards
is based solely on results, that is, how many bouts the wrestler
wins. This is a good example of Japan's process-oriented thinking.
This is not to say, however, that winning does not count in sumo.
In reality, each wrestler's monthly income is based largely on his rec-
ord. It is just that winning is neither everything nor the only thing.
Japanese temples and shrines are often built in the mountains,
Aand the most sacred altar is usually in the highest sanctuary. wor-
shiper wishing to pray at a shrine altar has to walk through dense
forest, up steep stone steps, and under many torii (wooden gate-
ways). At the Fushimi Inari Shrine near Kyoto, for example, there
are some 15,000 torii along the walkway to the altar! By the time he
reaches the altar, the worshiper is steeped in the sacred atmosphere
of the shrine and his soul is purified. Getting there is almost as
important as the prayer itself.
In the United States, generally speaking, no matter how hard a
person works, lack of results will result in a poor personal rating
and lower income or status. The individual's contribution is val-
ued only for its concrete results. Only the results count in a result-
oriented society.
Bridgestone Tire Co.'s Otsubo maintains that it is process-oriented
thinking that has enabled Japanese industry to attain its competitive
edge in world markets and that the KAIZEN concept epitomizes
Japan's process-oriented thinking. Such management attitudes make
a major difference in how an organization achieves change. Top
management that is too process-oriented runs the risk of lacking
long-term strategy, missing new ideas and innovations, instructing
people ad nauseam in minute work processes, and losing sight of
the forest for the trees. The result-oriented manager is more flexible
in setting targets and can think in strategic terms. However, he
18 KAIZEN
tends to slight the mobilization and realignment of his resources
for the strategy's implementation.
Otsubo suggests that the result-oriented criteria for evaluating
people's performance are probably a legacy of the "mass-production
society" and that the process-oriented criteria are gaining momen-
tum in the post-industrial, high-tech, high-touch society.
The difference between process-oriented thinking and result-
oriented thinking in business can perhaps best be explained with
reference to Figure 1.8.
If we look at the manager's role, we find that the supportive and
stimulative role is directed at the improvement of the processes,
while the controlling role is directed at the outcome or the result.
The KAIZEN concept stresses management's supportive and stimu-
lative role for people's efforts to improve the processes. On the one
hand, management needs to develop process-oriented criteria. On
the other hand, the control-type management looks only at the per-
formance or the result-oriented criteria. For abbreviation, we may
call the process-oriented criteria P criteria and the result-oriented
Rcriteria criteria.
P criteria call for a longer-term outlook, since they are directed
at people's efforts and often require behavioral change. On the other
hand, R criteria are more direct and short term.
Process Result
0-^0-p^>^(£ ME
Efforts for _. .
improvement Performance
t Control with
carrot and stick
Support and
R criteria
stimulate
i
P criteria
FIGURE 1.8 Process-Oriented (P) Criteria vs. Result-Oriented (R) Criteria
KAIZEN, The Concept 19
The difference between P criteria and R criteria may be better
understood by looking at Japanese management's approach to the
QCactivities of circles.
QC -circle activities are usually directed toward improvements in
the workplace, yet the supporting system is crucial. It is reported that
QC circles formed in the West are often short-lived. This appears
to be attributable mostly to the lack of a system that addresses the
real needs of the QC-circle members. If management is interested
Ronly in the results, it will be looking only at criteria for QC-circle
Ractivities. The criteria in this case often mean the money saved
as the result of their activities. Accordingly, management's interest
and support will be geared directly to the savings made by mem-
QCbers of the circle.
On the other hand, if management is interested in supporting the
QC circle's efforts for improvement, the first thing management has
to do is to establish P criteria. What kind of P criteria are available
to measure the effort made by QC-circle members?
Some obvious possibilities are the number of meetings held per
month, the participation rate, the number of problems solved (note
that this is not the same as the amount of money saved), and the
number of reports submitted. How do QC-circle members approach
their subjects? Do they take the company's current situation into
consideration in selecting the subject? Do they consider such fac-
tors as safety, quality, and cost in working out the problem? Do
their efforts lead to improved work standards? These are among the
P criteria to be used in evaluating their efforts and commitment.
QCIf the average circle meets twice a month and a particular
QC circle averages three meetings a month, this indicates that the
members of this group made a greater-than-average effort. The par-
ticipation (attendance) rate is another measure to check the level of
effort and commitment of the QC-circle leader or facilitator.
RIt is often easy to quantify criteria. In fact, in most companies,
R Rmanagement has only criteria available, since criteria typically
relate to sales, cost, and profit figures. However, in most cases it is
QCalso possible to quantify P criteria. In the case of circles, for
instance, Japanese management has developed elaborate measures
to quantify the effort level. These and other numbers are added
together and used as the basis for recognition and awards. (For a
more detailed treatment of QC-circle activities, see Chapter 4.)
At one of Matsushita's plants, the waitresses in the cafeteria formed
20 KAIZEN
QC circles and studied the tea consumption during the lunch period.
When large tea pots were placed on the tables with no restrictions
on use, the waitresses noticed, tea consumption differed greatly
from table to table. Therefore, they collected data on the tea-
drinking behavior of employees during lunch. For one thing, they
found that the same people tended to sit at the same table. After
taking and analyzing data for days, they were able to establish an
expected consumption level for each table. Using their findings,
they started putting out different amounts of tea for each table, with
the result that they were able to reduce tea-leaf consumption to half.
How much were their activities worth in terms of the actual amount
of money saved? Probably very little. However, they were awarded
the Presidential Gold Medal for the year.
Most Japanese companies also have a suggestion system, which
incorporates incentives. Whenever a suggestion yields savings,
management provides rewards in proportion to the savings realized.
Such rewards are paid both for suggestions made by individuals and
QCthose made by groups such as circles.
One of the distinctive features of Japanese management has been
that it has made a conscious effort to establish a system that sup-
ports and encourages P criteria while giving full recognition to
R criteria. At the workers' level, Japanese management has often
established separate award systems for P criteria. While the rewards
Rfor criteria are financial rewards directly geared to the savings or
profits realized, those for P criteria are more often recognition and
honor geared to the effort made.
QCAt Toyota Motor, the most coveted award is the Presidential
Award, which is not money but a fountain pen presented to each
recipient personally by the president. Each recipient is asked to
submit the name he wants engraved on the fountain pen. One per-
son might ask for his wife's name to be printed, another his daugh-
ter's name. Bachelors sometimes ask for their girlfriends' names.
And of course, many recipients ask to have their own names on
their pens. The award carries prestige because top management has
implemented a carefully planned program to show workers that
QCtheir active participation in projects is important to the com-
pany's success. In addition, top executives attend these meetings,
showing their active involvement and support. Such clear demon-
strations of commitment go beyond the tokens of the awards to bind
management and worker together in the program.
KAIZEN, The Concept 21
The process-oriented way of thinking bridges the gap between
process and result, between ends and means, and between goals
and measures, and helps people see the whole picture without
bias.
Thus, both P criteria and R criteria can be and have been estab-
lished at every level of management: between top management and
division management, between middle managers and supervisors,
and between supervisors and workers.
A manager, by definition, must take an interest in the results.
However, when we observe the behavior of successful managers at
a successful company, we often find that such managers are also
process oriented. They ask process-oriented questions. They make
Rdecisions based on both P criteria and criteria, although they
may not always be aware of the distinction between the two sorts
of criteria.
A process-oriented manager who takes a genuine concern for
P criteria will be interested in:
Discipline
Time management
Skill development
Participation and involvement
Morale
Communication
In short, such a manager is people-oriented. Further, the manager
will be interested in developing a reward system that corresponds to
P criteria. If management makes positive use of the process-oriented
way of thinking and further reinforces it with KAIZEN strategy, it
will find that the overall corporate competitiveness will be greatly
improved in the long term.
This book deals with specific concepts, tools, and systems that
are effectively employed in KAIZEN strategy. Readers will find
that they can easily apply them in their day-to-day business situa-
tions. These concepts and tools work well not because they are
Japanese but because they are good management tools. Just as
KAIZEN strategy involves everyone in the organization, the mes-
sage of this book should be extended to everyone, top management,
middle management, supervisors, and workers on the shop floor.
2
Improvement
East and West
KAIZEN vs. Innovation (1)
There are two contrasting approaches to progress: the gradualist ap-
proach and the great-leap-forward approach. Japanese companies
generally favor the gradualist approach and Western companies the
great-leap approach -an approach epitomized by the term innovation:
Japan KAIZEN Innovation
West
Strong Weak
Weak Strong
Western management worships at the altar of innovation. This
innovation is seen as major changes in the wake of technological
breakthroughs, or the introduction of the latest management concepts
or production techniques. Innovation is dramatic, a real attention-
getter. KAIZEN, on the other hand, is often undramatic and subtle,
and its results are seldom immediately visible. While KAIZEN is a
continuous process, innovation is generally a one-shot phenomenon.
In the West, for example, a middle manager can usually obtain
top management support for such projects as CAD (Computer-Aided
CAM MRPDesign),
(Computer-Aided Manufacture), and (Materials
Requirements Planning), since these are innovative projects that have
a way of revolutionizing existing systems. As such, they offer ROI
(Return On Investment) benefits that managers can hardly resist.
23
24 KAIZEN
However, when a factory manager wishes, for example, to make
small changes in the way his workers use the machinery, such as
working out multiple job assignments or realigning production
processes (both of which may require lengthy discussions with the
union as well as reeducation and retraining of workers), obtaining
management support can be difficult indeed.
Figure 2.1 compares the main features of KAIZEN and of inno-
vation. One of the beautiful things about KAIZEN is that it does
not necessarily require sophisticated technique or state-of-the-art
technology. To implement KAIZEN, you need only simple, conven-
tional techniques such as the seven tools of quality control (Pareto
1. Effect KAIZEN Innovation
Long-term and long- Short-term but dramatic
2. Pace
3. Timeframe lasting but undramatic Big steps
4. Change
5. Involvement Small steps Intermittent and non-
6. Approach
Continuous and incre- incremental
7. Mode mental
Abrupt and volatile
8. Spark Gradual and constant Select few "champions"
Rugged individualism,
Everybody individual ideas and
Collectivism, group efforts
efforts, systems
approach Scrap and rebuild
Maintenance and Technological break-
improvement
throughs, new inven-
Conventional know-how tions, new theories
and state of the art
Requires large invest-
9. Practical Requires little invest- ment but little effort to
requirements ment but great effort to maintain it
maintain it Technology
Results for profits
10. Effort orientation People
Better suited to fast-
11. Evaluation criteria Process and efforts for
growth economy
better results
12. Advantage Works well in slow-
growth economy
FIGURE 2. 1 Features of KAIZEN and Innovation
Improvement East and West 25
diagrams, cause-and-effect diagrams, histograms, control charts,
scatter diagrams, graphs, and check sheets). Often, common sense
is all that is needed. On the other hand, innovation usually requires
highly sophisticated technology, as well as a huge investment.
KAIZEN is like a hotbed that nurtures small and ongoing changes,
while innovation is like magma that appears in abrupt eruptions
from time to time.
One big difference between KAIZEN and innovation is that
while KAIZEN does not necessarily call for a large investment to
implement it, it does call for a great deal of continuous effort and
commitment. The difference between the two opposing concepts
may thus be likened to that of a staircase and a slope. The innova-
tion strategy is supposed to bring about progress in a staircase
progression, as depicted in Figure 2.2. On the other hand, the
KAIZEN strategy brings about gradual progress. I say the innovation
strategy "is supposed to" bring about progress in a staircase progres-
sion, because it usually does not. Instead of following the staircase
pattern of Figure 2.2, the actual progress achieved through innova-
tion will generally follow the pattern shown in Figure 2.3 if it lacks
the KAIZEN strategy to go along with it. This happens because a
system, once it has been installed as a result of new innovation, is
subject to steady deterioration unless continuing efforts are made
first to maintain it and then to improve on it.
In reality, there can be no such thing as a static constant. All
systems are destined to deteriorate once they have been established.
One of the famous Parkinson's Laws is that an organization, once it
has built its edifice, begins its decline. In other words, there must be
a continuing effort for improvement to even maintain the status quo.
Time
FIGURE 2.2 Ideal Pattern from Innovation
26 KAIZEN
Time
FIGURE 2.3 Actual Pattern from Innovation
When such effort is lacking, decline is inevitable. (See Figure 2.4.)
Therefore, even when an innovation makes a revolutionary standard
of performance attainable, the new performance level will decline
unless the standard is constantly challenged and upgraded. Thus,
whenever an innovation is achieved, it must be followed by a series
of KAIZEN efforts to maintain and improve it. (See Figure 2.5.)
Whereas innovation is a one-shot deal whose effects are gradu-
ally eroded by intense competition and deteriorating standards,
KAIZEN is an ongoing effort with cumulative effects marking a
steady rise as the years go by. If standards exist only in order to
maintain the status quo, they will not be challenged so long as the
level of performance is acceptable. KAIZEN, on the other hand,
What should be
(standard)
What should be What actually is
(standard)
innovation
What actually is
Time
FIGURE 2.4 Innovation Alone
Improvement East and West 27
^e* s^<\&1
KAIZEN
Innovation
New standard
Time
FIGURE 2.5 Innovation plus KAIZEN
means a constant effort not only to maintain but also to upgrade
KAIZENstandards. strategists believe that standards are by nature
tentative, akin to stepping stones, with one standard leading to
another as continuing improvement efforts are made. This is the
reason why QC circles no sooner solve one problem than they
move on to tackle a new problem. This is also the reason why the
so-called PDCA (Plan-Do-Check-Action) cycle receives so much
emphasis in Japan's TQC movement. (See Chapter 3 for more dis-
cussion on techniques to maintain and raise standards.)
Another feature of KAIZEN is that it requires virtually every-
KAIZENone's personal efforts. In order for the spirit to survive,
management must make a conscious and continuous effort to sup-
port it. Such support is quite different from the fanfare recognition
that management accords to people who have achieved a striking
success or breakthrough. KAIZEN is concerned more with the
process than with the result. The strength of Japanese management
lies in its successful development and implementation of a system
that acknowledges the ends while emphasizing the means.
Thus KAIZEN calls for a substantial management commitment of
time and effort. Infusions of capital are no substitute for this invest-
ment in time and effort. Investing in KAIZEN means investing in
people. In short, KAIZEN is people-oriented, whereas innovation
is technology- and money-oriented.
28 KA1ZEN
Finally, the KAIZEN philosophy is better suited to a slow-growth
economy, while innovation is better suited to a fast-growth economy.
While KAIZEN advances inch-by-inch on the strength of many
small efforts, innovation leaps upward in hopes of landing at a much
higher plateau in spite of gravitational inertia and the weight of
investment costs. In a slow-growth economy characterized by high
costs of energy and materials, overcapacity, and stagnant markets,
KAIZEN often has a better payoff than innovation does.
As one Japanese executive recently remarked, "It is extremely
difficult to increase sales by 10 percent. But it is not so difficult to
cut manufacturing costs by 10 percent to even better effect."
At the beginning of this chapter, I argued that the concept of
KAIZEN is nonexistent or at best weak in most Western com-
panies today. However, there was a time, not so long ago, when
Western management also placed a high priority on KAIZEN-like
improvement-consciousness. Older executives may recall that before
the phenomenal economic growth of the late 1950s and early 1960s,
management attended assiduously to improving all aspects of the busi-
ness, particularly the factory. In those days, every small improvement
was counted and was seen as effective in terms of building success.
People who worked with small, privately owned companies may
recall with a touch of nostalgia that there was a genuine concern
for improvement "in the air" before the company was bought out or
went public. As soon as that happened, the quarterly P/L (profit/
loss) figures suddenly became the most important criterion, and
management became obsessed with the bottom line, often at the
expense of pressing for constant and unspectacular improvements.
For many other companies, the greatly increased market oppor-
tunities and technological innovations that appeared during the first
two decades after World War II meant that developing new prod-
ucts based on the new technology was much more attractive or
"sexier" than slow, patient efforts for improvement. In trying to
catch up with the ever-increasing market demand, managers boldly
introduced one innovation after another, and they were content to
ignore the seemingly minor benefits of improvement.
Most Western managers who joined the ranks during or after
those heady days do not have the slightest concern for improve-
ment. Instead, they take an offensive posture, armed with profes-
sional expertise geared toward making big changes in the name of
Improvement East and West 29
innovation, bringing about immediate gains, and winning instant
recognition and promotion. Before they knew it, Western managers
had lost sight of improvement and put all their eggs in the inno-
vation basket.
Another factor that has abetted the innovation approach has been
the increasing emphasis on financial controls and accounting. By
now, the more sophisticated companies have succeeded in establish-
ing elaborate accounting and reporting systems that force managers
to account for every action they take and to spell out the precise
payout or ROI of every managerial decision. Such a system does
not lend itself to building a favorable climate for improvement.
Improvement is by definition slow, gradual, and often invisible,
with effects that are felt over the long run. In my opinion, the most
glaring and significant shortcoming of Western management today
is the lack of improvement philosophy. There is no internal system
in Western management to reward efforts for improvement; instead,
everyone's job performance is reviewed strictly on the basis of
results. Thus it is not uncommon for Western managers to chide
people with, "I don't care what you do or how you do it. I want the
results — and now!" This emphasis on results has led to the innovation-
dominated approach of the West. This is not to say that Japanese
management does not care about innovation. But Japanese man-
agers have enthusiastically pursued KAIZEN even when they were
involved in innovation, as is evident, for example, in the case of
Nissan Motor.
THE CASE OF NISSAN MOTOR
At the No. 2 Body Section at Nissan's Tochigi plant, the first weld-
ing robot was introduced around 1973. During the following decade, the
section's automation rate was pushed up to 98 percent, and the roboti-
zation rate for welding work has been increased to 60 percent. During
this period, the standard work time in this section was reduced by 60
percent and production efficiency improved 10 percent to 20 percent.
These improvements in productivity were the combined result of the
increased automation and the various KAIZEN efforts made in the
workshop during that period.
According to Eiichi Yoshida, who formerly headed this section and
is now deputy general manager of the plant's production control and
30 KAIZEN
(Nissan Motor— continued)
engineering department, there have been numerous KAIZEN cam-
paigns implemented in this section.
Each year has its own campaign for improvement programs. In 1975,
for instance, the campaign was named the "Seven-up Campaign," and
improvements were sought in the seven areas of standard time, effi-
ciency, costs, suggestions, quality assurance, safety, and process utiliza-
tion. The campaign chosen for 1978 was the "3-K 1, 2, 3 Campaign," the
3-K standing for kangae (thought), kodo (action), and kaizen and the
1, 2, 3 standing for the hop-step-jump sequence of thinking, acting,
and improving.
While management makes decisions involving large investment out-
lays such as for automation and robotics, KAIZEN campaigns involve
both management and workers in making small, low-cost improvements
in the way work is done.
Reduction in standard time has always been a highly effective way to
increase productivity. At the Tochigi plant, efforts in this area included
employing the work-factor method and standardizing virtually every
motion workers made in performing their tasks.
In terms of each individual's work, the smallest unit of work time
considered in a KAIZEN strategy is l/100th of a minute, or 0.6 seconds.
Any suggestion that saves at least 0.6 seconds— the time it takes a
worker to stretch out his hand or walk half a —step is seriously consid-
ered by management.
Aside from encouraging the QC-circle activities that had been going
on in the plant for some time, the section started giving awards and
KAIZENother recognition for workers' efforts in such areas as safety,
error reduction, and number of suggestions.
A special KAIZEN sheet is made available to the worker for this
purpose, and each suggestion for improvement, whether it is brought
by a group (QC circle) or by an individual, is "registered" on the sheet
and submitted to the section manager. Most of these suggestions are
handled within the same section and by the section manager.
Yoshida says that the majority of the workers' suggestions are for
changes that the workers can implement on their own. For instance, a
worker may suggest that the height of his tool rack be adjusted to make
it easier to use. Such a suggestion can be taken care of within the sec-
tion, and in fact, the section has bought welding equipment to do just
such small repair work. This section has been engaged in continuous
KAIZEN all the time that the production processes were being auto-
mated and robotized.
Norio Kogure, staff engineer in the section, recalls what his new
boss told him when he was transferred into the section: "There will
be no progress if you keep on doing the job exactly the same way for
six months."
Improvement East and West 31
(Nissan Motor— continued)
Thus the SOP in the workplace is subject to constant change and
improvement. At the same time, management tells the workers that the
SOP is an absolute standard to which they should strictly conform until
it is improved.
Both management and workers find room for improvement every day.
It typically starts with studying the way workers perform their jobs to
see if the standard time can somehow be shortened by 0.6 seconds or
more. Next, the search is on for a way to improve the production proc-
esses. Sometimes the subassembly work that has previously been con-
ducted off the line can be incorporated in the line so that the few sec-
onds required to move the subassembly to the line can be saved. Kogure
says that more than 90 percent of the engineers' work in the manufac-
turing department is directed at some form of KAIZEN.
Yoshida believes that it is the manager's job to go into the work-
place, to encourage the workers to generate ideas for job improvement,
and to be genuinely interested in their suggestions. He also believes
that these efforts at the grassroots level were behind the plant's success
in halving robot breakdowns in 1980 and 1981.
KAIZEN vs. Innovation (2)
Science Technology Design Production -- Market
Innovation KAIZEN
FIGURE 2.6 Total Manufacturing Chain
Figure 2.6 represents the sequence from the scientists' laboratories
to the marketplace. Scientific theories and experimentation are
applied as technology, elaborated as design, materialized in pro-
duction, and finally sold on the market. The two components of
improvement, innovation and KAIZEN, may be applied at every
stage in that chain. For instance, KAIZEN has been applied to
R&D activities while innovative ideas were applied to marketing to
create the supermarkets and discount stores that dominated U.S.
distribution in the 1950s. However, KAIZEN's impact is normally
more visible closer to production and market, while innovation's
impact is more visible closer to science and technology. Figure 2.7
compares innovation and KAIZEN in this sequence.
32 KAIZEN
Innovation KAIZEN
Creativity Adaptability
Individualism
Teamwork (systems approach)
Specialist-oriented Generalist-oriented
Attention to great leaps Attention to details
Technology-oriented People-oriented
Information: closed, proprietary
Information: open, shared
Functional (specialist) orientation Cross-functional orientation
Seek new technology Build on existing technology
Line + staff Cross-functional organization
Limited feedback Comprehensive feedback
FIGURE 2. 7 Another Comparison of Innovation and KAIZEN
Looking at this list, we find that the West has been stronger on
the innovation side and Japan stronger on the KAIZEN side. These
differences in emphasis are also reflected in the different social and
cultural heritages, such as the Western educational system's stress
on individual initiative and creativity as against the Japanese educa-
tional system's emphasis on harmony and collectivism.
I was recently talking with a European diplomat posted to Japan,
who said that one of the most conspicuous differences between the
West and Japan was that between the Western complacency and over-
confidence and the Japanese feelings of anxiety and imperfection.
The Japanese feeling of imperfection perhaps provides the impetus
for KAIZEN.
In looking at the relations between KAIZEN and innovation, we
can draw the comparison expressed in Figure 2.8. However, as Japa-
nese industry turns to the high-technology areas, it will lead to the
situation depicted in Figure 2.9.
Once perceptions of new products have been changed this way, the
Japanese competitive edge will become even greater. This change is
already under way. Japanese companies have made major advances in
KAIZEN-related development even in the technologically most ad-
vanced areas, says Masanori Moritani, senior researcher at Nomura
Research Institute.
Moritani points to the semiconductor laser as an example. The
goal of semiconductor-laser development was to improve power
Improvement East and West 33
Technology Preferred Product
Process
Level
Western Technology- Innovative
perceptions High oriented product
technology innovation
Japanese Low People- KAIZEN-
technology + oriented +
perceptions KAIZEN oriented
KAIZEN product
FIGURE 2.8 Western and Japanese Product Perceptions
levels and at the same time reduce manufacturing costs. Once this goal
was achieved, it became possible to apply the semiconductor laser
to mass-produced products such as compact discs and videodiscs.
At one major Japanese electronics company, the semiconductor
laser developed for use in compact-disc players cost ¥500,000 in
1978. In 1980, it was down to ¥50,000, and by the fall of 1981, it
had been reduced to ¥10,000. In 1982, when the first compact-disc
players were put on the market, the semiconductor laser cost only
¥5,000. As of 1984, it was down to the ¥2,000-to-¥3,000 level.
During the same period, the semiconductor laser's useful life was
Technology Level Preferred Process Product
High technology — Technology-oriented Innovative product
innovation
with KAIZEN
orientation
Technology-oriented
KAIZEN
Low technology People-oriented KAIZEN-oriented
product
KAIZEN
FIGURE 2.9 Upcoming Japanese Product Perceptions
34 KAIZEN
extended from 100 hours for some early models to more than
50,000 hours for later models. Most of these developments can be
attributed to improvements in materials and production engineering,
such as making thinner layers of semiconductors (which requires
precision control to the less-than-one-micron level) and adopting the
MOCVDgaseous (Molecular Oxidization Chemical Vapor Deposi-
tion) method. At the same time, the discs themselves were improved
and pit error was reduced.
Reflecting all these efforts, compact disc players themselves
underwent many changes for the better during this period. Prices
also fell. In 1982, early models were priced around ¥168,000. In
1984, the mass-market model was selling for ¥49,800. During this
same two-year period, the size of the player was reduced by five-
sixths and the power consumption by nine-tenths. Since the basic
technology for the semiconductor laser had been established by the
mid-1970s, these developments represent engineering —efforts in
R&D, design, and production — to improve on an existing technology.
Super LSI memories, fiber optics, and CCD (Charge-Coupled
Devices) also represent high technology that has been successfully
applied through the KAIZEN approach. The main thrust of techno-
logical development today is shifting from the great-leap-forward
approach to the gradual-development approach. Technological break-
throughs in the West are generally thought to take a Ph.D., but
there are only three Ph.D.s on the engineering staff at one of Japan's
most successfully innovative companies — Honda Motor. One is
founder Soichiro Honda, whose Ph.D. is an honorary degree, and
the other two are no longer active within the company. At Honda,
technological improvement does not seem to require a Ph.D.
There is no doubt about the need for new technology, but it is
what happens after the new technology has been developed that
Amakes the difference. product coming out of an emerging tech-
nology starts off very expensive and somewhat shaky in quality.
Therefore, once a new technology has been identified, the effort
must be increasingly directed at such areas as mass production,
cost reduction, yield improvement, and quality improvement — all
areas requiring doggedly tenacious efforts.
Moritani says Western researchers typically show enthusiasm in
tackling challenging projects and are very good at such work, but they
will be at a great disadvantage in meeting the Japanese challenges
Improvement East and West 35
in mass-produced high-technology products if they concentrate only
on the great-leap-forward approach and forget everyday KAIZEN.
An analysis of the semiconductor industries in Japan and the
United States reveals the two countries' respective competitive advan-
tages and illustrates the difference between KAIZEN and innova-
tion. Professor Ken'ichi Imai (no relation) and Associate Professor
Akimitsu Sakuma at Hitotsubashi University have argued that
In greatly simplified terms, nearly all major innovations that
determine the direction of future product and process development
originate in U.S. firms. Japanese firms display their strength in
incremental innovations in fields whose general contours have
Aalready been established. ... dominant design is an authori-
tative synthesis of individual innovations formerly applied sepa-
rately in products. The economic value of a dominant design is its
ability to impose itself as a standard in the creation of products.
By virtue of standardization, economies of scale can be sought in
production. This leads to a shift in the nature of competition.
While initially the performance characteristics of a product are the
deciding factor in competition, mass production leads to a second
deciding factor: the cost of the product.
Since a dominant design synthesizes past technologies, after its
appearance major innovations no longer occur frequently. From
then on, the center stage is occupied by incremental innovations
aiming at product refinements and at improvements in the manu-
facturing process. The innovations conceived by Japanese firms
correspond exactly to these incremental innovations. The repu-
tation earned by Japan's 16K RAMs when they captured a large
share of the American market was precisely one of high per-
formance and low price *
Paul H. Aron, vice chairman at Daiwa Securities America and pro-
fessor of international business at New York University's Graduate
School of Business Administration, recently said:
Americans stress innovation and sophistication, and many com-
panies complain that they cannot retain engineers if they are
assigned only to state-of-the-art applications. The dream of the
American engineer is to establish an independent company and
'Economic Eye, June 1983, published by Keizai Koho Center. Reprinted by permission.
36 KAIZEN
make an important breakthrough. After the breakthrough, the
engineer expects his company to be acquired by a large con-
glomerate. The engineer anticipates receiving an ample financial
reward and then, if he is young, to proceed to create another high-
technology company and repeat the process. Thus the production
engineer often has less prestige, and this field does not attract "the
best and the brightest" students.
The Japanese engineer largely expects to remain with the large
company. Production engineers in Japanese companies often enjoy
at least as much prestige as researchers.
Thus the preference for KAIZEN over innovation may also be
explained in terms of management's use of engineering skills, as
well as the engineer's own perception of his job.
In the West, the engineer takes pride in doing his job as a theo-
retical exercise, and he is not necessarily concerned with maintain-
ing rapport with the production site. On visiting an American plant
recently, I was told that the machines installed there were designed
by engineers at the head office who had never visited the plant.
These machines often had to undergo lengthy adjustment and
reworking before they were put to use.
In his book Japanese Technology (Tokyo, The Simul Press,
1982. Reprinted by permission.), Masanori Moritani states:
Priority on production
A third strength of Japanese technology is the close connection
between development, design, and the production line. In Japan
this is considered simple common sense, but that is not always the
case in the United States and Europe.
In Japan, production runs take off with a bang, quickly reach-
ing yearly outputs of a million units or more. American and Euro-
pean companies are amazed by this. Cautious in their expansion of
production, often contenting themselves with simply doubling
yearly output over three or four years, these companies are incred-
ulous of the Japanese pace.
The principal element in this rapid expansion is active invest-
ment in plant and equipment, but what makes this technologically
feasible is the unification of development, design, and production.
In the case of home VCRs, development and design were con-
ducted with full appreciation of the need for mass production.
Easy mass production was the key design objective, and close
Improvement East and West 37
consideration was given to parts availability, precision processing,
and set assemblage. . . .
Outstanding college-educated engineers are assigned in large
numbers to the production line, and many are given an important
say in business operations. Many manufacturing-industry execu-
tives are engineers by training, and a majority have had extensive
first-hand experience on the shop floor. In Japanese firms, the pro-
duction department has a strong voice in development and design.
In addition, engineers involved in development and design always
visit the production line and talk things over with their counter-
parts on the floor.
In Japan, even researchers are more likely to be found on the
shop floor than in a research center; the majority of them are
assigned to factories and operational divisions. Hitachi has about
R&D8,000 staff, but only 3,000 work at its research center. The
remaining 5,000 are distributed among the various factories and
operational divisions.
Nippon Electric Company (NEC) employs 5,000 technicians
who are engaged either directly or indirectly in research and
development. As many as 90 percent work in the factories. What
this means is that the connection and understanding between
development and production is very smooth indeed. . . .
The shop-floor elite
In certain respects, French television manufacturers outshine
their Japanese competitors in the development of top-of-the-line
models. Soft-touch and remote control were introduced by the
French well before the Japanese began using them. But while
France may spend a great deal on producing splendid designs for
their deluxe models, the quality of the actual product is inferior to
Japanese sets. This is because French designers do not fully
understand the problems encountered on the shop floor, and
because the design work is not done from the perspective of the
person who actually had to put the machine together. In short,
there is a serious gap between development and production, a
product of gaps between various strata in the company hierarchy
itself. . . .
My own career began in shipbuilding, as I worked first for
&Hitachi Shipbuilding Engineering Company. Immediately after
graduating from the University of Tokyo, I was assigned to the
factory, where I took my place on the shop floor and, wearing a
uniform like all the other employees, joined them at their work.
38 KAIZEN
At the time, shipyard workers had a distinctive style of dress; they
would wrap a towel around their necks and tuck it into the front of
their uniforms. In the world of shipbuilding, I suppose it was the
fashion equivalent of wearing a scarf or muffler, although it also
had the practical function of keeping the sweat from running down
one's back and chest. No doubt these sweat-stained towels did not
look like the height of fashion to outsiders, but I used to think of
that dirty towel around my neck as a proud symbol of my work as
an on-site technician*
Thus one of the strengths of Japanese managers in designing new
products is that they can assign capable engineers to both KAIZEN
and innovation. In general, the Japanese factory has a far higher
ratio of engineers assigned to it than the American or European fac-
tory. Even so, the trend in Japan is to transfer more engineering
resources to the plant to ensure even better communication with
the production people.
Various practical tools, such as quality tables, have also been
developed to improve cross-functional communication among cus-
tomers, engineers, and production people. They have contributed
greatly to creating products that meet customer requirements, as
shown in Chapter 5 on quality deployment.
KAIZEN and Measurement
Productivity is a measure, not a reality, says Gerald Nadler, profes-
sor and chairman of the Industrial and Systems Engineering Depart-
ment, University of Southern California. And yet we have often
sought the "secret" of productivity, as if the key were in defining
the measures of productivity. According to Nadler, it is like finding
that the room is too cold and looking at the thermometer for the
reason. Adjusting the scale on the thermometer itself does not solve
the problem. What counts is the effort to improve the situation,
such as throwing more logs on the fire or checking the furnace—
PDCAin other words, invoking the cycle. Productivity is only
a description of the current state of affairs and the past efforts
of people.
We might say that quality control, too, is a measure and not reality.
Opcit., pp. 42-43, 46-48.
Improvement East and West 39
Quality control was started as a post-mortem inspection of defects
produced in the production process. It goes without saying that no
matter how hard one may work at inspecting the products, this
does not necessarily lead to improvements in the product quality.
One way to improve quality is by improving the production proc-
ess. Toying with the figures is not going to improve the situation.
This is why quality control in Japan was started from the inspec-
tion phase, moved back to the phase of building quality in the pro-
duction processes, and has finally come to mean building quality
into the product at the time of its development.
If productivity and quality control are not the reality and serve
only as a measure for checking the results, then what is the reality
and what has to be done? The answer to this question is that the
efforts put in to improve both productivity and quality are the real-
ity. The key words are efforts and improve. This is the time to be
liberated from the spell of productivity and quality control, get
down to the basics, roll up our sleeves, and start working on improve-
ment. If we define the manager's job as that of managing processes
and results, then the manager should have yardsticks or measures
for both of them. When Nadler said productivity is only a meas-
ure, he actually meant that productivity is a result-oriented index
(R criterion). When we deal with improvement, we should be work-
ing on process-oriented indices (P criteria).
However, in most Western companies, many executives are not
even aware that there are such things as process-oriented indices,
because such indices have never been available in the company.
The questions that the Western manager asks are always directed at
the result-oriented indices, such as monthly sales, monthly expenses,
number of products produced, and eventually the profits made. We
only have to look at the reporting figures employed by the typical
Western company, such as the cost-accounting data, to see how
true this is.
When the manager is looking for a specific result, such as quar-
terly profits, productivity indices, or quality level, his only yard-
stick is to see whether the goal has been achieved or not. On the
other hand, when he uses process-oriented measures to look into
the efforts for improvement, his criteria will be more supportive
and he may be less critical of the results, since improvement is
slow and comes in small steps.
40 KAIZEN
In order to be supportive, management must have rapport with
the workers. However, Western management often refuses to estab-
lish such rapport. Often, the supervisors in the workplace do not
know how to communicate with the workers. They are afraid to talk
to them, as if they did not speak the same language (which is liter-
ally true in many countries where "guest workers" are employed).
According to Neil Rackham, president of the Huthwaite Research
Group, American managers put forward their own ideas nine times
for every one time they build on, improve, or support other peo-
ple's ideas in meetings. The amount of supportive behavior (sup-
portive statements) varies widely but on the average is less than
half the level of supportive behavior seen in groups from Singa-
pore, Taiwan, Hong Kong, and Japan. It is essential that Western
managers develop a more supportive style in dealing with each
other and with workers.
Quite recently, after a day-long discussion on the KAIZEN con-
cept, William Manly, senior vice president of the Cabot Corpora-
tion, quipped: "I thought they had two major religions in Japan:
Buddhism and Shintoism. Now I find they have a third: KAIZEN!"
Facetious though this sounds, one should have a religious zeal in
promoting the KAIZEN strategy and not be concerned with the
immediate payout. This is a behavioral change requiring mission-
ary zeal, and the proof of its value is in the satisfaction it brings
and in its long-term impact. KAIZEN is based on a belief in peo-
ple's inherent desire for quality and worth, and management has to
believe that it is going to "pay" in the long run.
Such things as sharing, caring, and commitment are important in
KAIZEN. Just as various rituals are needed in religion, KAIZEN
also requires rituals, since people need ways to share their experi-
ences, support one another, and build commitment together. This
QCis why reporting meetings are so important for circles. Fortu-
nately, one does not have to wait until the next life before seeing
his reward in KAIZEN, as the benefits of KAIZEN may be felt
within four or five years, if not immediately. The punishment for
not adhering to the KAIZEN creed is to be left out of the enjoy-
ment of the progress every individual and organization must expe-
rience to survive.
KAIZEN also requires a different kind of leadership, leadership
based on personal experience and conviction and not necessarily
Improvement East and West 41
on authority, rank, or age. Anybody who has gone through the
experience himself can become a leader. For proof, one only has to
QCnote how enthusiastically circle leaders, young and old, make
their presentations at meetings. This is because improvement brings
many truly satisfying experiences in —life identifying problems,
thinking and learning together, tackling and solving difficult tasks,
and thus being elevated to new heights of achievement.
3
KAIZENby
Total Quality Control
Yhe avenues through which KAIZEN may
be pursued are almost endless. However, the "high road" to KAIZEN
has been the practice of total quality control (TQC).
As mentioned earlier, the concept of TQC is often understood in
QCthe West as part of activities, and it has often been thought to
be a job for quality control engineers. Given the danger that the
name TQC might be misleading and might fail to clearly commu-
nicate the scope of Japanese-style TQC, the term company-wide
quality control (CWQC) was coined as a more precise term to use
in explaining Japanese quality control to overseas observers. Within
Japan, however, most companies still use the term TQC in refer-
ring to their company-wide quality control activities.
Quality Control Deals with the Quality of People
When speaking of "quality," one tends to think first in terms of
product quality. Nothing could be further from the truth. In TQC,
the first and foremost concern is with the quality of people. Instill-
ing quality into people has always been fundamental to TQC. A
company able to build quality into its people is already halfway
toward producing quality products.
The three building blocks of business are hardware, software,
and "humanware." TQC starts with humanware. Only after the
humanware is squarely in place should the hardware and software
aspects of business be considered.
43
44 KAIZEN
Building quality into people means helping them become
KAIZEN-conscious. Both functional and cross-functional prob-
lems abound in the work environment, and people must be helped
to identify these problems. Then they must be trained in the use of
problem-solving tools so that they can deal with the problems they
have identified. Once a problem has been solved, the results must
be standardized to prevent recurrences. By going through this
never-ending cycle of improvement, people can become KAIZEN-
minded and build the discipline to achieve KAIZEN in their work.
Management can change the corporate culture by building quality
into people, but this can be done only through training and firm
leadership.
The French anthropologist Claude Levi-Strauss noted at the
1983 International Symposium on Productivity in Japan that
The concern of this symposium should be less improvement of
the productivity of products than improvement of the productivity
of systems. We might suggest that productivity nowadays suffers
little from a quantitative lack of produced goods and more from
the fact that we remain dependent on the old technical system our
earliest ancestors relied on: in regard to the exploitation of natural
resources, we still are predators.
In order to produce better systems, a society should be less
concerned with producing material goods in increasing quantities
than with producing people of a better quality -in other words,
beings capable of producing these systems*
According to the Japan Industrial Standards (Z8101-1981) defini-
tion, quality control is "a system of means to economically produce
goods or services which satisfy customer requirements." The defi-
nition is expressed as follows:
Implementing quality control effectively necessitates the
cooperation of all people in the company, including top manage-
ment, managers, supervisors, and workers in all areas of corporate
activities such as market research and development, product plan-
ning, design, preparations for production, purchasing, vendor
Brief Report on International Productivity Symposium, Japan Productivity Center,
Tokyo, 1983. Reprinted by permission.
KAIZEN by Total Quality Control 45
management, manufacturing, inspection, sales and after-services,
as well as financial control, personnel administration, and training
and education. Quality control carried out in this manner is called
company-wide quality control or total quality control.
CWQCFor our purposes, let us consider the two terms and TQC
as interchangeable. No matter which name is employed, the real
CWQCnature of or TQC goes far beyond quality control per se.
My own definition would be that it is a systematic and statistical
approach for KAIZEN and problem solving as a management tool.
We will use the term TQC when referring to the broad concept of
CWQCeither or TQC throughout this chapter.
In 1979, Mankichi Tateno, then president of Japan Steel Works,
proclaimed that the company was going to introduce TQC. He for-
mulated three goals:
1. To provide products and services that satisfy customer require-
ments and earn customer trust.
2. To steer the corporation toward higher profitability through
such measures as improved work procedures, fewer defects,
lower costs, lower debt service, and more advantageous order
filling.
3. To help employees fulfill their potential for achieving the cor-
porate goal, with particular emphasis on such areas as policy
deployment and voluntary activities.
He also expressed the hope that TQC thus introduced would help
the corporation cope with any severe environmental changes or
other external problems, win customer confidence, and secure and
improve profitability.
TQC has become an elaborate system of corporate problem solv-
ing and improvement activities. Let me briefly outline this TQC
system in light of KAIZEN.
TQC signifies a statistical and systematic approach for KAIZEN
and problem solving. Its methodological foundation is the statis-
QCtical application of concepts, including the use and analysis
of statistical data. This methodology demands that situations and
problems under study be quantified as much as possible. As a
TQCresult, practitioners have acquired the habit of working with
hard data, not with hunches or gut feelings. In statistical problem
46 KAIZEN
solving, one repeatedly returns to the source of the problem to
gather data. This approach has fostered a process-oriented way
of thinking.
Process-oriented thinking means that one should check with the
result and not by the result. It is not enough to evaluate people sim-
ply in terms of the result of their performance. Instead, management
should look at what steps have been followed and work at jointly
establishing criteria for improvement. This encourages feedback
and constant communication between management and workers. In
the process-oriented way of thinking, a distinction is made between
Rprocess-oriented P criteria and result-oriented criteria. In TQC,
people do not subscribe to the axiom "All's well that ends well."
TQC is a way of thinking that says, "Let's improve the processes.
If things go well, there must be something in the processes that
worked well. Let's find it and build on it!"
These joint efforts often prove to be valuable training experi-
ences for everyone. There are many ways in which processes can
be improved, and thus it is necessary to prioritize problem-solving
approaches. All these things are taken into account in process-
oriented thinking. This introduces an entirely new concept into
management science in which the manager's job is basically two-
fold. One part of the job is maintenance-related administration:
checking the performance (result) of work, R criteria. The other
part is improvement-related management: checking the process that
has led to a specific result. Here the manager is concerned with
P criteria.
Japanese vs. Western Approaches
to Quality Control
It is clear that there are some basic differences between the Japa-
nese and the Western approaches to quality control:
QC1. The job of manager in the West is often a technical one
with little support from top management for working in the
areas of people and organization. The QC manager seldom
ranks high enough to have the close and constant contact with
top management needed to promote QC as a primary cor-
porate objective in a company-wide program.
KA1ZEN by Total Quality Control 47
2. In the West, the often heterogeneous composition of the work
force and the adversarial relations between labor and man-
agement may make it difficult for management to introduce
changes for improved productivity and quality control. Japan's
relatively homogeneous population has a more uniform edu-
cational background and social outlook, all of which tends to
simplify management-labor relations.
3. Professional knowledge of quality control and other engineer-
ing techniques is being spread to engineers in the West, but it
is rarely made available to other employees. In Japan, a great
deal of effort has been spent on transmitting the necessary
knowledge to everyone, including blue-collar workers, so
people can solve their own job problems better.
4. Top managers in Japanese companies are committed to TQC,
making TQC a company-wide concern rather than the lonely
QCjob of a specific manager. TQC means that QC efforts
must involve people, organization, hardware, and software.
5. There is a Japanese axiom, "Quality control starts with train-
ing and ends in training." Training is conducted regularly for
top management, middle management, and workers.
6. In Japan, small groups of volunteers within the company
engage in quality-control activities, using TQC's special statis-
tical tools. The quality circle is one such small-group activity.
Quality-circle activities account for 10 percent to 30 percent
of all management efforts in the field of quality control. Qual-
ity circles are a very important part of quality control, but
their contribution should not be overemphasized, since noth-
ing can substitute for a good, fully integrated TQC manage-
ment program.
TQC7. In Japan, several organizations actively promote activi-
ties on a nationwide basis. Examples are JUSE (The Union
of Japanese Scientists and Engineers), the Japan Management
Association, Japan Standard Association, Central Japan Qual-
ity Control Association, and the Japan Productivity Center.
These organizations have few if any counterparts in the West.
Kaoru Ishikawa, president of Musashi Institute of Technology and
professor emeritus at Tokyo University, has played a crucial role
48 KAIZEN
in developing the QC movement and QC circles in Japan. He has
TQClisted six features as characterizing the movement in Japan:
1. Company-wide TQC, with all employees participating
2. Emphasis on education and training
3. QC-circle activities
4. TQC audits, as exemplified by the Deming Prize audit and by
the President's audit
5. Application of statistical methods
6. Nationwide TQC promotion
The concept of TQC may be better understood by becoming familiar
with certain key phrases that have been developed over the years
and are widely quoted among TQC practitioners in Japan. Let's
take a look at them.
Speak with Data
TQC emphasizes the use of data. Kaoru Ishikawa writes in his
book Japanese Quality Control (in Japanese) , "We should talk with
facts and data." Yet he goes on to say: "When you see data, doubt
them! When you see the measuring instrument, doubt it! When you
see chemical analysis, doubt it!" He further reminds readers that there
are such things as false data, mistaken data, and immeasurables.
Even if accurate data are available, they will be meaningless if
they are not used correctly. The skill with which a company collects
and uses data can make the difference between success and failure.
In most companies, the job of dealing with customer complaints
and reworking the product is assigned to newcomers and regarded
as not so important. Says president Kenzo Sasaoka of Yokogawa-
Hewlett-Packard, "Actually, this job should be given to the bright
young engineers, since it offers a valuable chance to get customer
feedback and to improve the product."
The problem is that even if the valuable information is available,
few people take the trouble to make good use of it. Obsessed with
short-term profits, most managers would much rather forget about
customers. To these managers, customer complaints are a nuisance.
Such managers thus forfeit a golden opportunity to collect infor-
mation and get it back to the people who can use it. Information
KAIZEN by Total Quality Control 49
sharing among executives is just as important as information collec-
tion and information processing. Where information is properly
collected, processed, channeled, and put to practical use, there is
Aalways the possibility of improvement. system of data collection
and evaluation is a vital part of a TQC/ KAIZEN program.
In order to develop a product that satisfies customers, data on
the customers' requirements must first be collected by the sales and
marketing people, and, to some extent, by the complaint depart-
ment staff. These data are next passed along to the design, engineer-
ing, and production departments. New-product development requires
TQCthat be extended through different departments via an effective
communication network. TQC in Japan has developed various sys-
tems, tools, and formats to facilitate these activities, including cross-
functional organizations, systems diagrams, and quality deployment.
Quality First, Not Profit First
This dictum probably reveals the nature of TQC and KAIZEN
better than anything else, for it reflects the belief in quality for qual-
ity's sake and KAIZEN for KAIZEN's sake. As mentioned earlier,
TQC includes such things as quality assurance, cost reduction, effi-
ciency, meeting delivery schedules, and safety. The "quality" here
refers to improvement in all of these areas. Japanese managers have
found that seeking improvement for improvement's sake, is the
surest way to strengthen their companies' overall competitiveness. If
you take care of the quality, the profits will take care of themselves.
Professor Masumasa Imaizumi of Musashi Institute of Technol-
ogy states that the basic elements to be managed in a company are
quality (of products, services, and work), quantity, delivery (time),
safety, cost, and employee morale. He continues:
Managers at every level are responsible for managing these ele-
ments properly. An enterprise can prosper only if the customers
who purchase the products or services are satisfied. Customers are
satisfied or not with the quality of products or services. In other
words, the only thing an enterprise can offer customers is quality.
All other indices relate to internal management. This is the first
meaning of quality first.
I do not subscribe to the idea of making top-quality products at
low cost and in large quantity from the very beginning. Of course,
50 KAIZEN
such would be the ultimate goal of TQC. However, as a first step,
I would suggest making top-quality products first and then moving
to faster production and lower costs. In the beginning, we must
establish the technologies and systems to make products that can
satisfy customers, and at this stage we should disregard such fac-
tors as cost, volume, and productivity. Only after the technology
has been achieved should we move on to the next phase of making
good products at low cost and in large quantity without sacrificing
quality. This is the second meaning of quality first.
Manage the Previous Process (Managing Upstream)
Because of its preoccupation with data and processes rather than
results, TQC encourages people to go back to the previous process
on the production line to seek out a problem's causes. Improvement
requires that we always be aware of what comes from the previous
process. In the factory, problem solvers are told to ask "why" not
once but five times. Often the first answer to the problem is not the
root cause. Asking why several times will dig out several causes,
one of which is usually the root cause.
Taiichi Ohno, former Toyota Motor vice president, once gave the
following example of finding the real cause of a machine stoppage.
Question 1: Why did the machine stop?
Answer 1: Because the fuse blew due to an overload.
Question 2: Why was there an overload?
Answer 2: Because the bearing lubrication was inadequate.
Question 3: Why was the lubrication inadequate?
Answer 3: Because the lubrication pump was not functioning right.
Question 4: Why wasn't the lubricating pump working right?
Answer 4: Because the pump axle was worn out.
Question 5: Why was it worn out?
Answer 5: Because sludge got in.
By repeating "why" five times, it was possible to identify the real
cause and hence the real solution: attaching a strainer to the lubri-
cating pump. If the workers had not gone through such repetitive
questions, they might have settled with an intermediate counter-
measure, such as replacing the fuse.
KA1ZEN by Total Quality Control 51
The Next Process Is the Customer
An old-time village basketmaker knew every customer who
came to buy his wares. These people were his neighbor's wife, his
friends, and his distant relatives. He would not have dreamed of
selling them a basket with a hole in the bottom. In today's mass-
production age, however, customers have been reduced to the
abstract, and the person making the product neither knows nor
cares who the customers are. Nor do the customers have any way
of knowing who produced the product. The process has been imper-
sonated. The seller may balk at selling a basket with a big hole in
the bottom. But what if it is a small hole? Caveat emptor.
This problem is exacerbated by the fact that the people who
make the products and those who sell them are separate people.
When an autoworker fails to tighten adequately, the consequences
of his work may not be immediately apparent on the assembled car.
What does it matter whether the bolt is tight enough or not? How-
ever, if the person working next on the car is thought of as a cus-
tomer, the problem is personalized, and it does make a difference
whether the bolt is tight enough or not.
If quality is to be maintained and improved in the production
process, there must be smooth communication among all the people
at every production stage. We often find strong sectionalism and
rivalry among production workers, particularly among those work-
ing in neighboring processes. Care must be taken to build cohesion
throughout every stage of work.
Thirty years ago, Kaoru Ishikawa encountered this problem
head-on while employed as a consultant to Nippon Steel. In one
instance, Ishikawa was investigating some surface scratches found
on certain steel sheets. When he suggested to the engineer in charge
of that particular process that his team review the problems together
with the engineers in the following process, the engineer replied,
"Do you mean to tell us that we should go examine the problems
with our enemiesT To this Ishikawa replied, "You must not think of
them as your enemies. You must think of the next process as your
customer. You should visit your customer every day to make sure
he is satisfied with the product." However, the engineer insisted,
"How could I do such a thing? If I show up in their workshop,
they'll think I've come to spy on them!"
52 KAIZEN
This incident gave Ishikawa the inspiration for his now-famous
phrase "The next process is the customer." This concept has helped
engineers and shop-floor workers to realize that their customers are
not only those in the marketplace who purchase the final product but
also the people in the next process who receive work from them. This
realization has in turn led to the formal commitment never to send
defective parts to those in the following process. This was later insti-
tutionalized as the kamban system and the just-in-time concept. From
the beginning, the challenge of treating next-process workers as cus-
tomers has required that workers be frank enough to acknowledge
their own workplace's problems and do everything within their power
to solve them. Today this concept is also applied in clerical work.
For instance, the design engineer's customers are the manufactur-
ing people. Therefore, this dictum calls for the engineer to be atten-
tive to the needs of the manufacturing people when he works on a
new product, and to consider such items as the existing equipment's
process capabilities and the availability of materials. Similarly, the
clerical worker's customers are the people who are on the receiving
end of his paper output. The entire concept of quality assurance
thus rests on the premise that assuring quality to each customer at
each stage will assure quality in the finished product.
Customer-Oriented TQC, Not Manufacturer-Oriented TQC
This concept is also referred to as "market-in" as opposed to
"product-out."* As the TQC concept is applied down through the
various stages of production, it finally reaches its ultimate benefici-
aries — the customers who buy the product. Thus TQC is said to be
TQCcustomer-oriented. This is also why activities have shifted
their emphasis from maintaining quality throughout the production
process to building quality into the product by developing and de-
signing products that meet customer requirements.
This axiom is probably one of the most fundamental elements of
TQC. All TQC-related activities in Japan are conducted with the
customers' needs in mind. And yet some managers tend to think in
terms of their own requirements. Too often they initiate new-product
schemes simply because the financial resources, technology, and
*"Product-out," the antonym to "market-in," is used to indicate a priority on producing
goods and services without paying sufficient attention to customer requirements.
KAIZEN by Total Quality Control 53
production capacity are available. These new products satisfy the
company's need to increase production, and managers keep their
fingers crossed hoping that the customers will like their products.
If the people in the next process are customers, customer-oriented
TQC also means that one should never inconvenience them. When-
ever a defective product or service is passed on, the people down-
stream suffer. The effect of a problem is usually recognized not by
the people who create it but rather by people downstream, including
the ultimate customers.
The customer-oriented nature of TQC is apparent in the way
TQC is defined in many Japanese companies. Komatsu, for example,
defines its TQC goal as "Satisfying Komatsu's worldwide customers
through rational, cost-conscious research, development, sales, and
servicing."
Through the application of TQC concepts, Japanese companies
have built a system for designing, developing, producing, and serv-
icing products with the ultimate aim of satisfying their customers.
This has been the hidden key to Japanese products' acceptance by
customers throughout the world. There are still too many compa-
nies, both in Japan and abroad, whose top management pays lip
service to the concept of satisfying customers but does not have a
system to achieve it.
Even today, there are doubts about how attentive most Western
salespeople are to their customers' needs. Recently, a European
household-appliance retailer was quoted as saying, "Whenever a
Japanese salesman comes to visit us, he asks all sorts of questions
so that he can learn what we really need. But when a European
salesman comes by, all he does is tell us how stupid we are. If we
complain, he always tries to win the argument."
Another important aspect is how the customer is defined. For in-
stance, who is the customer for someone who makes automobile tire
components? True, he sells the product to the tire manufacturer, and
thus he should be attentive to the tire manufacturer's requirements.
However, what about the automobile company that buys tires from
the tire manufacturer, or the driver who buys an automobile from the
auto company? Are these people his customers as well? Often these
different customers have different quality requirements.
Thus defining the customer is a top management priority, since
this definition determines the quality characteristics that the prod-
uct needs to satisfy the customer.
54 KAIZEN
The following case illustrates how employees improved tele-
phone reception by paying close attention to customers' needs.
CASE STUDY:
SHORTENING CUSTOMERS' TELEPHONE
WAITING TIME*
This is the story of a QC program that was implemented in the main
office of a large bank. An average of 500 customers call this office
every day. Surveys indicated that the callers tended to become irritated
if the phone rang more than five times before it was answered, and
often would not call the company again. In contrast, a prompt answer
after just two rings reassured the customers and made them feel more
comfortable doing business by phone.
1. Selection of a Theme. Telephone reception was chosen as a QC
theme for the following reasons: (1) Telephone reception is the first
impression a customer receives from the company, (2) this theme coin-
cided with the company's telephone reception slogan, "Don't make
customers wait, and avoid needless switching from extension to exten-
sion," and (3) it also coincided with a company-wide campaign being
promoted at that time which advocated being friendly to everyone
one met.
First, the staff discussed why the present method of answering calls
made callers wait. Figure 3.1 illustrates a frequent situation, where a
call from customer B comes in while the operator is talking with cus-
tomer A. Let's see why the customer has to wait.
Lstome,^ |=^> f Operate j (=> fegg*J
ICustomer Bl
FIGURE 3.1 Why Customers Had to Wait
Reprinted with permission from "The Quest for Higher Quality— the Deming Prize
and Quality Control," Ricoh Company, Ltd.
KAIZEN by Total Quality Control 55
(Case Study — continued)
At (1), the operator receives a call from the customer but, due to
lack of experience, does not know where to connect the call. At (2), the
receiving party cannot answer the phone quickly, perhaps because he is
unavailable, and nobody can take the call for him. The result is that the
operator must transfer the call to another extension while apologizing
for the delay.
2. Cause-and-Effect Diagram and Situation Analysis. In order to
fully understand the situation, the circle members decided to conduct a
survey regarding the callers who waited for more than five rings. Circle
members itemized factors at a brainstorming discussion and arranged
them in a cause-and-effect diagram (see Figure 3.2). Operators then
kept checksheets on several points to tally the results spanning 12 days
from June 4 to 16. (See Figure 3.3.)
3. Results of the Checksheet Situation Analysis. The data recorded
on the checksheets unexpectedly revealed that "one operator (partner
out of the office)" topped the list by a big margin, occurring a total of
172 times. In this case, the operator on duty had to deal with large num-
bers of calls when the phones were busy. Customers who had to wait a
long time averaged 29.2 daily, which accounted for 6% of the calls
received every day. (See Figures 3.4 and 3.5.)
4. Setting the Target. After an intense but productive discussion, the
QCstaff decided to set a program goal of reducing these waiting callers
Receiving party not present Cause-and-effect diagram
Telephone call rush
Complaining Not giving section and Does not understand
name of receiving party customer's message
Lack of Takes time to explain
knowledge of branch office location
company jobs
Starts leaving a message
FIGURE 3.2 What Makes Customers Wait
(Case Study— continued)
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57
58 KAIZEN
(Case Study — continued)
to zero. That is to say that all incoming calls would be handled promptly,
without inconveniencing the customer.
5. Measures and Execution. (1) Taking lunches on three different
shifts, leaving at least two operators on the job at all times.
Up until this resolution was made, a two-shift lunch system had
been employed, leaving only one operator on the job while the other
was taking her lunch break. However, since the survey revealed that
this was a major cause of customers waiting on the line, the company
brought in a helper operator from the clerical section.
(2) Asking all employees to leave messages when leaving their
desks.
The objective of this rule was to simplify the operator's chores
when the receiving party was not at his desk. The new program was
explained at the employees' regular morning meetings, and company-
wide support was requested. To help implement this practice, posters
were placed around the office to publicize the new measures.
(3) Compiling a directory listing the personnel and their respec-
tive jobs.
The notebook was specially designed to aid the operators, who could
not be expected to know the details of every employee's job or where to
connect his incoming calls.
6. Confirming the Results. Although the waiting calls could not be
reduced to zero, all items presented showed a marked improvement as
shown in Figures 3.6 and 3.7. The major cause of delays, "one operator
(partner out of the office)," plummeted from 172 incidents during the
control period to 15 in the follow-up survey.
TQC Starts with Training and Ends with Training
TQCThe introduction of in Japan invariably starts with all-out
efforts for training managers and workers. This is a natural follow-up
to the concept of building quality into people. When Kajima, one
TQCof Japan's leading construction companies, started its activi-
ties in 1978, the initial target was to provide educational programs
to all 16,000 employees within three years. When the company
found that sending managers to public seminars and inviting out-
side lecturers to speak was not enough to expose all employees to
the courses, it developed special TQC video courses to be con-
ducted through 110 in-house video terminals.
KAIZEN by Total Quality Control 59
The major aim of these various training programs was to instill
TQC thinking in all employees -in effect, to spark an "awareness"
revolution. Kajima conducted separate courses for the different
organizational levels and reached everyone within three years. In
the process, the company developed 800 QC leaders and produced
its own textbooks to be used within the company.
If TQC regards the next process as the customer, then the scope
TQCof by its very nature extends to the adjacent business unit
(process) and the next until it reaches the final destination. This is
why TQC's sphere extends vertically from top management to mid-
dle management, from middle management to supervisors, from
supervisors to workers, and from workers to part-time workers.
This is also why it extends horizontally from vendors on one end to
customers on the other.
In many companies, QC-circle activities are extended to include
part-time employees, because in order to solve the company's prob-
lems, everyone must be involved. In fact, part-timers often make
QCthe most active and enthusiastic members of circles and pro-
vide many useful suggestions for improvement.
Cross-Functional Management to Facilitate KAIZEN
The concept of managing the previous process means that TQC
should be extended to include vendors, suppliers, and subcontractors
in order to improve the quality of supplies and materials. As TQC
has come to include cost reduction, quality assurance, volume
management, and other areas, it has given rise to the concept of
cross-functional management. Under this concept, various depart-
ments cooperate in cross-functional activities. This is a horizontal
extension of TQC.
TQC encompasses various levels of management as well as vari-
ous functional departments. People are not isolated in TQC. TQC
seeks mutual understanding and collaboration. The TQC spirit is
contagious.
"Break departmental barriers" is a catch-phrase often used by a
company deciding to introduce TQC. This is especially true for
companies that have suffered from intense internal strife and know
how adversely departmental barriers affect such areas as quality,
cost, and scheduling. Thus these companies typically introduce
60 KA1ZEN
cross-functional management to break departmental barriers. Yet
such is not to say that each functional department should be weak.
On the contrary, each department should be strong enough to reap
the full benefits of cross-functional management.
As TQC spreads from one department to the next, strengthening
the horizontal and vertical interrelations among different organiza-
tional levels, it facilitates company-wide communication. Among
the many benefits of TQC are improved communication and more
efficient and effective processing and feedback of information among
TQCdifferent organizational strata. not only brings people together
around common goals, it underscores the value of information.
Follow the PDCA Cycle
(A Continuation of the Denting Wheel)
Deming stressed the importance of constant interaction among
research, design, production, and sales in the conduct of a com-
pany's business. To arrive at better quality that satisfies customers,
the four stages should be rotated constantly, with quality as the top
criterion. Later, this concept of turning the Deming wheel con-
stantly for the better was extended to all phases of management,
and the four stages of the wheel were seen to correspond to specific
managerial actions (see Figure 3.8).
Japanese executives thus recast the Deming wheel and called
PDCAit the wheel, to be applied in all phases and situations (see
PDCAFigure 3.9). The cycle is a series of activities pursued for
Design -* Plan Product design corresponds to the planning phase
of management.
Production — Do
Sales — Check Production corresponds to doing — making, or
Research — Action working on— the product that was designed.
Sales figures confirm whether the customer is
satisfied.
In case a complaint is filed, it has to be incor-
porated into the planning phase, and positive steps
(action) taken for the next round of efforts. Action
here refers to action for improvement.
FIGURE 3.8 Correlation Between Deming Wheel and PDCA Cycle
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Kaizen (Ky’zen), the Key to Japan’s Competitive Success The Key to Japanese Competitive Success by Imai Masaaki (z-lib.org)
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